Bradford & Bingley's shares recouped some of their losses yesterday but still remained firmly below the 55p at which the lender plans to issue new shares to raise £400m.

Even a 27% rise in the price to 43.25p means the underwriters to the fundraising could end up with stakes in the group .

B&B is preparing to publish the prospectus for the cash call - restructured for the third time in two months - before a shareholders meeting convened for July 17 to ratify the issue of new shares. Two previous meetings have been adjourned because of last minute changes to the structure of the deal.

The fundraising will push B&B's core tier-one capital ratio - a crucial measure of regulatory strength - above that of Royal Bank of Scotland which recently raised £12bn to bolster its ratio to 6%.

As B&B's shares recovered some of their recent losses, after the shock decision by private equity house TPG to back out of a £179m investment, Alliance & Leicester also rose on news of the appointment of a chairman to replace the late Sir Derek Higgs. Shares rose 18p to 232.75p when Alan Gillespie, former Goldman Sachs partner and current chairman of RBS subsidiary Ulster Bank, was named as chairman.

Gillespie was co-head of Goldman Sachs' European financial institutions group (Fig) which offers advice to banks on mergers and acquisitions. This aspect of his CV attracted the most attention.

Alex Potter, banks analyst at stockbroker Collins Stewart, said: "The appearance of a Fig banker from Goldman Sachs may get some M&A speculation back into the share price".

Gillespie, who will become chairman in September, said he was "particularly pleased" to be the next chairman of the bank which he argued had a "firm platform for growth as opportunities arise".

He is joining A&L at one of the most difficult periods in recent banking history. A&L admitted that it would not chase market share this year to bolster its own finances and faces questions about whether it will make a profit in the first half.

Although there is speculation about its need to preserve capital, its core tier-one ratio is already 6.4%. Analysts are discussing its interim dividend and the board will meet this month to decide its fate. Other banks have required shareholders to receive their dividends in shares rather than cash. So far A&L plans to make a so-called scrip dividend optional.